GameStop Stock Rallies After Company Touts Future Consoles
The company predicts big growth after next-generation boxes from PlayStation and Xbox -- and it praised the new game/toy combo "Disney Infinity."
GameStop stock jumped 9 percent Thursday after the retailer said that the Walt Disney Co's. new offering Disney Infinity is exceeding expectations and that new video game consoles coming from Sony and Microsoft will cause a growth spurt in the industry.
The prediction from GameStop executives came as the firm disclosed its quarterly earnings. Net earnings fell to $10.5 million from $21 million a year ago and revenue slipped 11 percent to $1.4 billion.
The positive forecast from GameStop also coincided with bullish comments from Sony, which said it was experiencing strong preorders for its PlayStation 4, scheduled to hit U.S. retailers on Nov. 15, around the same time that the next version of Microsoft's Xbox is due.
The new consoles can’t come soon enough for the sluggish industry. In July, market research firm NPD reported that video game hardware and software sales fell 19 percent in the U.S. But GameStop management said Thursday that it expects the console category to rise as much as 30 percent this year and up to 15 percent next year.
On Thursday, Tony Wible of Janney Capital Markets boosted his fiscal-year estimates for GameStop, which is one of the largest sellers of new and used video games in the world. He also said “fair value” for the stock is $65, up from his previous estimate of $50.
GameStop shares rose $4.31 on Thursday to $51.93 and have advanced about 180 percent in the past year.
Besides Infinity, a game which features a bunch of characters from different Disney properties, other big games that should help the industry achieve growth are Battlefield 4 from Electronic Arts and Grand Theft Auto V from Take-Two Interactive Software.